ASEAN and Pacific Economic Co-operation

It was common political fear that brought the Association of South East Asian Nations (ASEAN) together in 1967. By and large, it was also an external threat that had held ASEAN together through the years. But while peace and stability within ASEAN provided a conducive environment for economic growth and development, each member in ASEAN had developed largely out of its own independent achievement. They owed rela tively little to joint ASEAN economic co-operation efforts. Existing economic co-operation had been based on inward-looking, bureaucratic protracted negotiations as formulated in the conceptual framework of the Kansu report (1974).1 With the dissolution of the Cold War and the resultant change in political configurations in Southeast Asia, the external threat can no longer be the glue. ASEAN needs a new cohesive force and a common purpose to survive the coming decade. Moreover, there are also other factors such as wider regional efforts in the Asia-Pacific which may create centrifugal forces to threaten the fragility of ASEAN sohdarity. On the other hand, ASEAN and Pacific economic co-operation in the 1990s could take advantage of the increasing web of economic linkages among ASEAN countries resulting from their progressively outward oriented industrialization strategy since the early 1980s. The latter was sus tained by investments from multinational corpora tions (MNCs), increasingly from Northeast Asia, which have penetrated all the ASEAN economies. This study examines ASEAN involvement in Pacific economic initiatives, and is structured as follows. Section 1 provides a brief overview of past ASEAN economic co-operation efforts, to highlight the structure and trends of development so far, and to assess the impact of the mechanisms chosen for ASEAN economic co-operation (ASEAN industrial projects, ASEAN industrial comple mentation scheme, ASEAN industrial joint venture scheme). Existing trends in direct foreign invest ment and trade in the Asia-Pacific region will be examined in Section 2 to reflect the outward orientation of ASEAN economies in the 1980s, particularly the new mode of ASEAN economic co-operation based on an outward oriented strategy that emphasized the role of the private sector, while Section 3 analyses the various regional economic